(Bloomberg) -- Euro-area consumer confidence unexpectedly improved, though it remained below anything seen during the pandemic as the rising cost of living hurts households and energy shortages threaten to curb economic output.

A monthly gauge from the European Commission rose to -24.9 in August from -27 in July, according to data released Tuesday. Economists surveyed by Bloomberg had predicted a slight decline to -28.

Europe is bracing for a recession as inflation breaks record after record and the risk of a Russian energy cutoff rises. Activity in the 19-nation euro region declined for a second month in August, data earlier Tuesday showed. While manufacturing led the drop, the post-lockdown rebound in services like tourism almost ground to a halt, with weakness seeping into more and more sectors.

Despite the headwinds to growth, the European Central Bank is forging ahead with interest-rate increases following July’s initial half-point move. ECB officials may provide some insight on their next steps as they head to the Federal Reserve’s annual Jackson Hole gathering, which starts this week.

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